Nov
04Crack emerging in the BRIC
Filed Under (Global cues) by Deepak Singh on 04-11-2009
In economics, BRIC is an acronym that refers to the fast-growing developing economies of Brazil, Russia, India and China.
In this article, I have reviewed the main indices of BRIC nations and guess what’s the outcome - there is a clear crack that has emerged in BRIC block. The crack sadly is because of Indian market. Every other market just looks fine 
Brazil: Takes support at 50 dma
Brazil has been one of the strong markets this year - thanks to massive rise in commodity prices and lots of +ve sentiment towards Brazil. Sometimes, you have everything going your way…Brazil also won the 2016 Olympic bid.
Source: www.stockcharts.com
Russia: Doing well and continues to trade above 50 dma
I hope I have used the right index for Russian market. I always get confused on this market.
Source: www.stockcharts.com
INDIA: Conclusive Breakdown below 50 dma/100 dma
There is a saying - when a momentum market breaks 50 dma - one should never take it lightly because the market setup is ripe for panic. Remember, how China cracked in August despite other Global markets holding up well. It appears it is the same pattern getting played out in India right now.
Source: www.stockcharts.com
China - Recovered from August massive sell off
One of the reasons why many market participants are hopeful on Indian market - China’s recent example. The Chinese Shanghai Composite index had a steep fall and then spectacular rise. The Chinese market is now well above 50 dma.
Source: www.stockcharts.com
Summary
All BRIC markets are in fine shape trading above 50 dma except Indian market. The most surprising part - there has been no global trigger for the sell off. The sell off argument - Disappointing earnings + Steep Valuation was perfect setup for fall
Indian market more aligned to US market
S&P 500 has also cracked below 50 dma. But, thankfully, there has been no follow through selling. The joker in the pack - US Dollar. What USD might do from current levels will decide the direction of S&P 500?
Source: www.stockcharts.com
Looking Ahead:
Indian market is oversold but that is no guarantee for bounce. It all depends on what USD, S&P 500 does from here. One thing is certain - Indian market is technically very weak and hence on any sell off in S&P 500 - Indian market might get hammered some more. It’s time to be careful both on long as well as short side. SHORT Side because we are so oversold; and LONG side because we are technically so weak at current juncture.
Disclaimer - The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
I am trying to understand what is actionable from this interesting comparative study. Are you trying to suggest that India’s share of FII flow will be significantly lower compared to the others and hence not much up imovement in the future? Since I can trade only in the I of BRIC, how can I use this study to bring to bear to trade in the Indian market?
I hope you would not misunderstand my comment - I like the analysis just wondering what implication for our trading beyond what nifty chart is showing anyway.
warm regards,
Analysis is all about observing what’s happening around us so that one is vigilant on various factors that can hit us. That’s the purpose.